Egypt's annual headline urban inflation increased to 13.5% in May 2022, from 13.1% in April 2022, marking the highest rate since May 2019. May 2022 inflation reading continues to be affected by the depreciation of the exchange rate as well as the repercussions of Ukraine's invasion by Russia which led to higher international food prices. This comes as monthly headline urban inflation recorded 1.1% in May 2022 compared to 0.7% in May 2021. Monthly headline urban inflation in May 2022 reflected higher prices of regulated items; driven mainly by higher prices of water supply, for the first time since 2018, as well as regulated food items; reflected in higher prices of subsidized vegetable oils and rice. Additionally, monthly inflation was affected by higher prices of both services and retail items. Meanwhile, a decline in fresh vegetable prices that naturally follows the sharp rises in the previous months offset higher prices of market rice, fish and seafood as well as dairy products. On an annual basis, the increase in headline inflation during May 2022 was driven by the higher annual contribution of non-food items, as annual non-food inflation increased for the seventh consecutive month to record 8.6% in May 2022 from 7.5% in April 2022, which is the highest rate recorded since March 2020. On the other hand, food items recorded a lower annual contribution; as food inflation declined for the first time (on the back of a lower annual volatile food contribution), after accelerating strongly for six consecutive months, to record 24.8% in May 2022 from the 5-year peak level of 26.0% in April 2022. Although recording a slight decline, annual food inflation in May 2022 remains the highest since December 2017. Driven by broad-based higher annual contributions, annual core inflation increased for the ninth consecutive month, to record 13.3% in May 2022 from 11.9% in April 2022, the highest rate since January 2018. This comes as monthly core inflation recorded 1.6% in May 2022 compared to 0.3 in May 2021. Nationwide annual inflation and annual rural inflation increased to record 15.3% and 17.2% in May 2022, from 14.9% and 16.8% in April 2022, respectively. Prices of fresh fruits increased by 6.4%, while prices of fresh vegetables declined by 17.4%. Together, they contributed by negative 0.66% to monthly headline inflation. This partly reflected the dissipation of the shock in tomato prices that took place in April 2022). Prices of poultry declined, for the first time in five months, by 2.3%, to contribute by -0.10% to monthly headline inflation. Prices of fish and seafood increased, for the fifth consecutive month, by 5.6% to contribute by 0.12% to monthly headline inflation. Prices of red meat increased by 1.0% to contribute 0.04% to monthly headline inflation. Prices of market rice increased, for the eleventh consecutive month, by 21.0%, marking the highest increase on record. It contributed by 0.22% to monthly headline inflation. Prices of dairy products increased by 3.5%, to contribute 0.12% to monthly headline inflation. Prices of pasta increased, for the eighth consecutive month, by 5.8% to contribute by 0.05% to monthly headline inflation. Prices of other core food items including fats, other edible oils, pulses, market sugar, sweets, market tea, among others, increased to contribute by 0.20% to monthly headline inflation. Prices of regulated items increased by 2.6%, to contribute 0.59% to monthly headline inflation. This was mainly due to higher prices of water supply, rationed vegetable oils, rationed rice and tobacco. Prices of services increased by 0.9%, contributing 0.29% to monthly headline inflation. This was mainly due to the increase in the value of expenditures on restaurants and cafes, rental values, outpatient services and haircuts. Prices of retail items increased by 1.4%, to contribute 0.19% to monthly headline inflation. This was mainly due to the increase in the prices of clothing, household cleaning products, and personal care products. Monthly core inflation was affected by price changes of the aforementioned core CPI items. Core food items contributed 0.92% to monthly core inflation. Services contributed by 0.40% to monthly core inflation. In addition, retail items contributed by 0.26% to monthly core inflation.
